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Understanding Litigation for the Chinese Business Community in the Bay Area

As we all know, the San Francisco Bay Area is a prosperous commercial center on the U.S. West Coast integrating a variety of businesses from different parts of the world, including mainland China, Taiwan, and Hong Kong. The economic ties between the Bay Area and the Greater China market is so close that an increasing number of Chinese individuals and companies are swarming into the Bay Area every year for commercial opportunities and business expansion. According to recent statistics in 2012, San Francisco’s population of 805,235 consists of 21.4% Chinese descent. In Cupertino, 27.2% of the population is Taiwanese. And in Millbrae, 26% of the population is Hong Kong Chinese. The Silicon Valley also attracts Chinese immigrants with high-tech jobs, start-up opportunities, and an overall attractive quality of life. There are 85 Chinese companies that have registered with China’s Counsel General in San Francisco. As the growing Chinese population becomes an ever more vital part of the region’s general economic growth, the question of how Chinese individuals and business can best integrate into the larger American society and local culture has drawn increasing attention. One important aspect of cultural integration is adjusting to and using the American legal system to maximally protect the Chinese community’s legal rights and interests. Most Chinese probably formed some impressions of the American legal system from TV shows such as Judge Judy, Law and Order, CSI, etc. However, it must be remembered that these programs are for entertainment and not education, and are far from sufficient for anyone to truly understand the structure and operation of the American legal system. This article tries to give a brief but helpful summary about the use of law in America, how best to guide your actions to avoid running into problems with the system and how you can use litigation to protect your assets and other economic interests.

How do I stay out of trouble?

One important difference between the two cultures is that the Chinese culture is more focused on the group and consensus within the group, while the American culture is more focused on the individual. Also, Chinese often believe that business dealings are based on the long term “trust” relationship, while Americans usually would not rely on such “trust” without sufficient documentation and legal protection. Therefore, Chinese tend to think that business negotiations (usually conducted over an extended period of time), agreements (sometimes not even written down) and any problems that arise from negotiated agreements can be worked out between the parties. In America, business people tend to want to move quickly to work out a deal and want it in writing. If you are doing business in America, you must be prepared to move more quickly and to be much more careful in how you negotiate with the persons with whom you are dealing and what agreements you make with them.

Before entering into any negotiation, you must be clear about your own goals, or you may get pushed into directions that you do not wish to go, wasting time and upsetting the parties on the other side of the transaction. Once you are clear about your goals, you should do what you can to make the other parties understand not only what those goals are, but (unless very obvious) why they are important to you. This provides a solid basis for reasonable and efficient negotiation. However, you still must be careful in negotiation and in the drafting of agreements. Try to make clear that negotiations are just that, a process of trying to see if an agreement can be reached, but not an agreement in itself. Lawsuits sometimes arise when one party takes an action based on a belief that an agreement has been reached, such as turning down a similar business deal offered by another party or entering into another agreement to allow them to satisfy their perceived obligations, such as purchasing supplies or raw materials. In America, you should always make clear that neither party is bound by any part of the discussions, until those discussions are reduced to writing. And, though that message can be made in a friendly manner, it should be made clear in writing.